Unfortunately, divorce is a fact of life. Unsettling and even frightening, it often brings out the worst in people. This includes one spouse hiding income from the other in an attempt to keep it for himself and lessen his spouse’s settlement amount. Although penalties are in place to prevent this kind of unethical behavior, it still happens fairly frequently, particularly in marriages with a complex financial picture.
The more sources of income, investment accounts, retirement accounts, insurance policies, et cetera that a couple has, the easier it is for one spouse to hide money from the other. So how do spouses actually hide income?
Stash Cash Away – This is one of the easiest ways to hide money. A spouse might take small investment account withdrawals or debit card withdrawals over time and put the money in a safe deposit box in an undisclosed bank. Since many financial institutions no longer send monthly paper statements, keeping a secret safe deposit box with a stash of cash is easy to do.
Overpay the IRS – A spouse can overpay the IRS so that he receives a refund. With proper timing, the refund will arrive after the divorce is final.
Underreport Income to the IRS – A spouse can underreport his income on his tax return. Income that is not reported is income that is not divided with a spouse.
Defer Bonuses and Other Compensation – If a spouse is expecting a work bonus or other extra compensation and is friendly with his boss, then he can ask that this compensation be deferred until the divorce is finalized. This keeps this income off of the financial documents used to determine asset and income division.
These are just a few ways that one divorcing spouse can hide money from the other. Discovering if a spouse is concealing income takes a skilled family law attorney, someone with the know-how and resources to find hidden money. If you have questions, please call our office to speak with an experienced divorce attorney to learn your rights and your options.